Intel, Nvidia Sign Patent Cross-License Agreement

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Nvidia Corp. and Intel Corp. signed a patent cross-licensing agreement Friday morning, in a deal that will pave the way for Nvidia nForce chipsets that support Intel’s microprocessors.

The agreement was structured in two parts. Intel, Santa Clara, Calif., agreed to license its processor front-side bus technology to Nvidia, and the two sides also signed a patent cross-license agremeent. Terms of the licensing deal were left vague: a statement accompanying the announcement said only that the deal was a “multi-year” contract.

The deal allows both sides to expand their businesses, unfettered by legal constraints. Moreover, Santa Clara, Calif.-based Nvidia should essentially double its theoretical market share by signing the deal, analysts said, through an expansion into the Intel chipset market to which rival ATI Technologies has enjoyed access through its own license agreement signed in 2001. The ATI-Intel license was later updated to include the Pentium M and the 800-MHz processor bus.

“When you look at the deal, it’s really a win-win for everybody,” Nvidia spokesman Bryan Del Rizzo said. “If you look at the available market, AMD holds about 20 percent, while Intel is about 80 percent.”

Del Rizzo indicated that the potential technologies involved ranged from Nvidia’s SLI technology, which includes the ability to pair two graphics cards together for improved performance, to markets like the server and mobile space. He declined to comment specifically on the technologies involved, although sources close to the companies indicated that Nvidia will now be able to legally design chipsets for the mobile and server markets.

Intel spokesman Chuck Mulloy also declined to comment on the terms of the deal, or its provisions. “As you may know, Intel has signed multiple cross-license agreements with other companies,” he said. “This is consistent with that approach.”

Examined from just a chipset perspective, the deal allows Nvidia to become a larger fish in a fairly small pond. During the third quarter, Nvidia actually outsold ATI in chipsets, capturing 4.5 percent market share to ATI’s 4.2 percent, despite being prevented from selling an Intel chipset. Intel itself holds about a 60 percent share, according to Dean McCarron, an analyst with Mercury Research in Cave Creek, Ariz., who provided the market-share figures.

Intel competes with its licensees in the market for Intel-compatible chipsets. However, if one removes the chip giant from the equation, the remaining portion of the Intel-compatible market that Intel does not serve equals the potential AMD-compatible chipset market, McCarron said.

The deal is not a technology transfer, where details of particular technologies and how they are implemented are exchanged. That said, the cross-license does include the patents Nvidia holds on its graphics and video cores, Intel’s Mulloy said. While Nvidia’s GeForce graphics lines compete with ATI’s Radeon graphics technology, both are seen as technically superior to Intel’s integrated “Extreme Graphics” cores, which are exclusively found within Intel’s chipsets. When those chipsets are factored in, however, Intel holds a commanding 39 percent lead in the graphics market, analysts said.

“Nvidia had two options: one was a bus license, and one was a protected foundry approach,” McCarron said, referring to a strategy where chips are manufactured at chip foundries which have signed their own licensing agreements. By extension, chips produced there are considered exempt from legal constraints, a strategy Via Technologies used to produce Intel-compatible chips while it fought a patent battle with Intel. The two sides eventually signed their own cross-license agreement in April 2003.

“This is by far the cleanest way of doing it,” McCarron said. “In doing it this way their existing base of tier-1 OEMs will have no concern about using this product from a legal perspective.”

In other Nvidia news, the company and Asustek announced the first SLI-compatible motherboard, the A8N-SLI, on Wednesday.

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